Kirby Corporation (KEX)

Cash conversion cycle

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	483.09	543.28	196.53	136.38	352.87
Days of sales outstanding (DSO)	days	79.40	82.71	69.00	53.00	48.76
Number of days of payables	days	286.39	327.11	118.08	71.57	207.64
Cash conversion cycle	days	276.10	298.88	147.45	117.81	193.99

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 483.09 + 79.40 – 286.39
= 276.10

The cash conversion cycle for Kirby Corp. has shown some fluctuations over the past five years. In 2023, the company had a cash conversion cycle of 68.32 days, which was an improvement compared to the previous year where it stood at 78.38 days. This indicates that in 2023, Kirby Corp. was more efficient in converting its investments in raw materials and inventory into cash from sales.

Looking at the trend over the five years, we see that the cash conversion cycle increased from 62.16 days in 2019 to a peak of 100.89 days in 2020 before gradually declining in the following years. A higher cash conversion cycle suggests that the company takes longer to collect cash from customers relative to the time it takes to pay its suppliers, manage inventory turnover, and convert sales back into cash.

Overall, the downward trend observed from 2020 to 2023 indicates an improvement in Kirby Corp.'s management of working capital and efficiency in its operations. This trend suggests that the company has been successful in tightening its cash conversion cycle, which can positively impact its liquidity and financial performance.